RBI/2014-15/98
IDMD.PCD. 03/14.01.01/2014-15 July 1, 2014 The Chairmen / Chief Executives of all Scheduled Commercial Banks
(excluding RRBs) / Co-operative Banks / Primary Dealers Dear Sir/Madam, Master Circular on Call / Notice Money Market Operations The Reserve Bank of India has, from time to time, issued a number of guidelines / instructions / directives to banks and the Primary Dealers in regard to call / notice money market. To enable eligible institutions to have current instructions at one place, a Master Circular incorporating all the existing guidelines / instructions / directives on the subject has been prepared for reference of the market participants and others concerned. It may be noted that this Master Circular consolidates and updates all the instructions / guidelines contained in the circulars listed in the Appendix in so far as they relate to operations of eligible institutions in the call/notice money market. This Master Circular has also been placed on the RBI website at /en/web/rbi/notifications/master-circulars. Yours faithfully (Rekha Warriar)
Chief General Manager Encls.: As above
1. Introduction The money market is a market for short-term financial assets that are close substitutes of money. The most important feature of a money market instrument is that it is liquid and can be turned into money quickly at low cost and provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers. The call/notice money market forms an important segment of the Indian Money Market. Under call money market, funds are transacted on an overnight basis and under notice money market, funds are transacted for a period between 2 days and 14 days. 2. Participants Scheduled commercial banks (excluding RRBs), co-operative banks (other than Land Development Banks) and Primary Dealers (PDs), are permitted to participate in call/notice money market both as borrowers and lenders. 3. Prudential Limits 3.1 The prudential limits in respect of both outstanding borrowing and lending transactions in call/notice money market for scheduled commercial banks, co-operative banks and PDs are as follows:-
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Table: Prudential Limits for Transactions in Call / Notice Money Market
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Sr. No. |
Participant |
Borrowing |
Lending |
1 |
Scheduled Commercial Banks |
On a fortnightly average basis, borrowing outstanding should not exceed 100 per cent of capital funds (i.e., sum of Tier I and Tier II capital) of latest audited balance sheet. However, banks are allowed to borrow a maximum of 125 per cent of their capital funds on any day, during a fortnight. |
On a fortnightly average basis, lending outstanding should not exceed 25 per cent of their capital funds. However, banks are allowed to lend a maximum of 50 per cent of their capital funds on any day, during a fortnight. |
2 |
Co-operative Banks |
Outstanding borrowings of State Co-operative Banks / District Central Co-operative Banks / Urban Co-operative Banks in call / notice money market, on a daily basis should not exceed 2.0 per cent of their aggregate deposits as at end March of the previous financial year. |
No limit. |
3 |
PDs |
PDs are allowed to borrow, on average in a reporting fortnight, up to 225 per cent of their net owned funds (NOF) as at end-March of the previous financial year. |
PDs are allowed to lend in call/notice money market, on average in a reporting fortnight, up to 25 per cent of their NOF. |
3.2 Banks/PDs/ Co-operative banks may, with the approval of their Boards, arrive at the prudential limits for borrowing/lending in Call/Notice Money Market in terms of guidelines given in paragraph 3.1 above. The limits so arrived at may be conveyed to the Clearing Corporation of India Ltd. (CCIL) for setting of limits in NDS-CALL System, under advice to Financial Markets Department (FMD), Reserve Bank of India. 3.3 Non-bank institutions (other than PDs) are not permitted in the call/notice money market. 4. Interest Rate 4.1 Eligible participants are free to decide on interest rates in call/notice money market. 4.2 Calculation of interest payable would be based on the methodology given in the Handbook of Market Practices brought out by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). 5. Dealing Session Deals in the Call/Notice/Term money market can be done from 9:00 am to 5:00 pm on weekdays and from 9:00 am to 2:00 pm on Saturdays or as specified by RBI from time to time. 6. Documentation Eligible participants may adopt the documentation suggested by FIMMDA from time to time. 7. Reporting Requirement 7.1 With the implementation of the core banking solution, the Negotiated Dealing System (NDS) has been discontinued for reporting of OTC Call/Notice/Term Money transactions. 7.2 All dealings in Call/Notice/Term money executed on the Negotiated Dealing System-Call, i.e. NDS-Call (a screen –based, negotiated, quote-driven system), do not require separate reporting. 7.3 It is mandatory that all the OTC Call/Notice/Term money deals be reported over the reporting platform of NDS-Call by the parties who are having NDS-Call membership. 7.4 Such OTC deals should be reported within 15 minutes on NDS-Call reporting platform, irrespective of the size of the deal or whether the counterparty is a member of the NDS-Call or not. 7.5 Parties who are not having NDS-Call membership are advised to report the deals to Financial Markets Department, RBI in the reporting format given in Annex I of this master circular. 7.6 The reporting time for all OTC Call/Notice/Term money deals on NDS-Call is up to 5:00 pm on weekdays and 2:00 pm on Saturdays or as decided by RBI from time to time. 7.7 In case of any misreporting or repeated reporting of OTC deals by a party, the same should be immediately brought to the notice of FMD either through e-mail or through fax. 7.8 In case the situation so warrants, the Reserve Bank may call for information in respect of money market transactions of eligible participants.
Appendix List of Circulars Consolidated
Sr. No. |
Circular Number |
Subject |
1. |
CPC.BC.103/279A-90 dated April 12,1990 |
Access to the Call Money Market |
2. |
Ref.DBOD.No.Dir.BC.97/C.347-90 dated April 18, 1990 |
3. |
CPC.BC.111/279A-91 dated April 12, 1991 |
Call/Notice Money and Bills Rediscounting Market |
4. |
CPC.BC.144/07.01.279/94-95 dated April 17,1995 |
Widening Access to Call / Notice Money Market |
5. |
Ref.DBOD.No.FSC.BC.68/24.91.001-95 dated June 27, 1995 |
6. |
CPC.BC.162/07.01.279/96-97 dated April 15, 1997 |
Money Market – Routing of Transactions through DFHI |
7. |
CPC.BC.165/07.01.279/97-98 dated April 21, 1997 |
Money Market – Routing of Transactions through Primary Dealers |
8. |
CPC.BC.175/07.01.279/97-98 dated April 29, 1998 |
Money Market |
9. |
CPC.BC.185/07.01.279/98-99 dated April 20, 1999 |
Measures for Developing the Money Market – Call/Notice Money Market |
10. |
Ref.No.MPD.2785/279A(MM)/98-99 dated April 24, 1999 |
Call/Notice Money and Bills Rediscounting Markets – Routing of Transaction |
11. |
CPC.BC.190/07.01.279/99-2000 dated October 29, 1999 |
Money Market |
12. |
CPC.BC.196/07.01.279/99-2000 dated April 27, 2000 |
Money Market |
13. |
Ref.No.MPD.3513/279A(MM)/1999-2000 dated April 28, 2000 |
Call/Notice Money and Bills Rediscounting Markets – Routing of Transactions – Extract from the Statement on Monetary and Credit Policy for the Year 2000-01 |
14. |
MPD.BC.201/07.01.279/2000-01 dated October 10, 2000 |
Permission to non-banks to lend in the call money market |
15. |
MPD.BC.206/07.01.279/2000-01 dated April 19, 2000 |
Moving towards Pure Inter-bank Call Money Market |
16. |
DS.PCB.CIR.40/13.01.00/2000-01 dated April 19, 2001 |
Operations in Call / Notice Money Market |
17. |
MPD.2991/03.09.01/2000-01 dated April 21, 2001 |
Participation in Call / Notice Money Market |
18. |
MPD.3173/03.09.01/2000-01 dated May 8, 2001 |
Participation in Call / Notice Money Market |
19. |
Ref.DBOD.No.FSC.BC.125/24.92.001/2000-01 dated May 25, 2001 |
Permission to participate in Call / Notice / Term Money Market and Bills Rediscounting Scheme – Primary Dealers |
20. |
MPD.BC.214/07.01.279/2001-02 dated April 29, 2002 |
Money Market – Moving towards Pure Inter-bank Call Money Market |
21. |
DS.PCB.CIR.52/13.01.00/2001-02 dated June 24, 2002 |
Reporting of Call Money Transactions |
22. |
MPD.217/07.01.279/2001-02 dated June 27, 2002 |
Reliance on Call / Notice Money Market: Prudential Norm |
23. |
MPD.220/07.01.279/2002-03 dated July 31, 2002 |
Access to Call / Notice Money Market for Primary Dealers: Prudential Norms |
24. |
MPD.222/07.01.279/2002-03 dated October 29, 2002 |
Money Market |
25. |
MPD.225/07.01.279/2002-03 dated November 14, 2002 |
Reliance on Call / Notice Money Market: Prudential Norm |
26. |
MPD.226/07.01.279/2002-03 dated December 11, 2002 |
Reliance on Call / Notice Money Market: Prudential Norm |
27. |
DBOD.FSC.BC.85/24.91.001/2002-03 dated March 26, 2003 |
Permission to participate in Call / Notice Money Market and Bills Rediscounting Scheme – Private Sector Mutual Funds |
28. |
DBOD.FSC.BC.86/24.91.001/2002-03 dated March 26, 2003 |
Permission to participate in Call / Notice / Term Money Market and Bills Rediscounting Scheme – Primary Dealers |
29. |
MPD.BC.230/07.01.279/2002-03 dated April 29, 2002 |
Money Market – Moving towards Pure Inter-bank Call Money Market |
30. |
MPD.BC.234/07.01.279/2002-03 dated April 29, 2003 |
Participation of Non-bank Entities in Call / Notice Money Market |
31. |
MPD.BC.235/07.01.279/2002-03 dated April 29, 2003 |
Reporting of Call / Notice Money Market Transactions on NDS Platform. |
32. |
MPD.BC.241/07.01.279/2003-04 dated November 3, 2003 |
Money Market – Moving towards Pure Inter-bank Call / Notice Money Market |
33. |
MPD.BC.244/07.01.279/2003-04 dated November 5, 2003 |
Primary Dealers’ Access to Call / Notice Money Market |
34. |
MPD.BC.242/07.01.279/2003-04 dated November 5, 2003 |
Moving towards Pure Inter-bank Call / Notice Money Market |
35. |
MPD.BC.250/07.01.279/2003-04 dated May 25, 2004 |
Moving towards Pure Inter-bank Call / Notice Money Market |
36. |
MPD.BC.253/07.01.279/2004-05 dated July 3, 2005 |
Master Circular on Call / Notice Money Market Operations |
37. |
MPD.BC.259/07.01.279/2004-05 dated October 26, 2004 |
Moving towards Pure Inter-bank Call / Notice Money Market |
38. |
MPD.BC.260/07.01.279/2004-05 dated December 10, 2004 |
Reporting of Call / Notice Money Market Transactions |
39. |
MPD.BC.265/07.01.279/2004-05 dated April 29, 2005 |
Call/Notice Money Market – Review of Benchmark |
40. |
MPD.BC.266/07.01.279/2004-05 dated April 29, 2005 |
Participation in Call / Notice Money Market |
41. |
MPD.BC.267/07.01.279/2004-05 dated April 29, 2005 |
Reporting of Term Money Transactions on NDS Platform |
42. |
IDMD.PDRD.No. 1096/ 03.64.00/ 2009-10 dated September 02, 2009 |
Stand-alone Primary Dealers – Increase in Call/Notice Money Borrowing Limit |
43. |
FMD.MSRG. No.71/02.02.001/2012-13 dated September 25, 2012 |
Reporting of OTC Call / Notice / Term Money transactions |
44. |
IDMD/PCD.No.11/14.01.01/2013-14 dated Feb 26, 2014 |
Call/Notice Money Market Operations |
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